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A number changes. What should you check before acting? These three worked illustrations show the calculation, a possible decision and the follow-up that would test it. The scenarios are fictional and the arithmetic is checkable; they do not report client outcomes.
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What it is
The Decision-Behind-the-Books Library contains three worked illustrations: a margin change that needs a mix-and-cost check, a customer crossing an owner-chosen concentration watchpoint, and a projected cash shortfall that calls for checking payment timing. Each separates the signal from the conclusion.
It is the gap between seeing a number and knowing what it means, shown through three worked illustrations.
The five views are good at producing signals. Owners get stuck one step later: the number is on the screen, it looks bad, and the next move is not obvious. A template cannot teach that move. A worked illustration can show the questions between a number and an action.
The numbers and businesses below are invented teaching scenarios. They are not client cases or measured outcomes. Each shows the calculation, what remains unknown and what an owner could examine next.
Signal: Revenue rose from $100,000 to $120,000. Direct costs rose from $60,000 to $78,000. Gross profit rose from $40,000 to $42,000, but gross margin fell from 40% to 35%.
Review: The company has more gross profit, but less per sales dollar. Before changing prices, separate product mix, unit price and direct cost. This example does not identify the cause from totals alone.
Decision: Compare the two largest product groups on the same cost basis. Keep the current offer until the comparison shows whether the change comes from mix, costs or discounting.
Follow-up: Illustrative follow-up: if the added sales came from a lower-margin product, a blanket price increase may address the wrong cause. No actual client outcome is claimed.
Signal: Opening cash is $25,000. Expected receipts are $12,000 and payments are $21,000. Closing cash is $16,000, below an owner-chosen $20,000 reserve by $4,000.
Review: The cash calculation uses payment dates, not profit. Verify whether the receipt date is agreed and whether all payments, including tax and debt principal, are included.
Decision: Contact the customer about the actual receipt date and examine payment options before committing more cash. Do not assume a customer will pay early or a supplier will accept a delay.
Follow-up: Illustrative sensitivity: moving a $5,000 receipt into this week changes closing cash to $21,000, but moves the cash out of its original week. Recheck every affected week; timing changes are not new revenue.
Signal: One customer supplies $26,000 of $100,000 period revenue:26%. The owner had chosen25% as a point for a relationship review.
Review: The percentage identifies dependence, not whether the customer is bad. Check margin, contract duration, payment reliability, delivery commitments and realistic replacement options.
Decision: Write a loss-or-reduction scenario, meet the customer about their plans and compare capacity for other work. Do not terminate profitable work solely because a cell is flagged.
Follow-up: Illustrative follow-up: the owner may retain the account while reducing a specific dependence. The right action depends on the facts the review uncovers; the threshold does not choose it.
Who it is for
If you pull the five views every month and keep landing on the same wall, the number is clear and the next move is not, this is the library that teaches the move. It assumes you are already doing the review. It is the pattern set that sits behind it.
It is not an introduction to reviewing your books. Start with the manual and the pack. Come here when the signals are showing up and you want to see how other operators review the same shapes.
Choose the closest question, not the most dramatic result. Replace every example number, period and assumption before applying the reasoning. Take accounting and tax questions to the appropriate qualified professional.
What this is not
Examining a worked margin example sharpens your judgment. It does not tell you what your margin slip means in your business, with your customers and your constraints. The library is calibration. The decision is still yours, and the hardest ones are where business owner coaching earns its cost. The manual names that line, and the coaching is where it gets crossed.
Back to the manual →Use this with
Monthly review
Run the five views first so the example has a real number to attach to.
Input cleanup
Clean the layout when the review keeps dying before the signal appears.
Manual
Keep the examples tied to the full monthly operating method.
When the work is live
Stan reviews each request for fit. All corporate work starts with an inquiry and is quoted separately. Stan confirms the people, stakes, scope, and fee in writing before work starts. The page provides the repeated patterns; an engagement reviews the live numbers and decision.
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